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Economy of : a Snapshot idris, rafiq and mansur, kasim and marso, marso

Universiti , Universiti Malaysia Sabah, STIE

30 August 2019

Online at https://mpra.ub.uni-muenchen.de/95899/ MPRA Paper No. 95899, posted 19 Sep 2019 14:44 UTC

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Studies on

THE ECONOMY OF SABAH & KALIMANTAN

Towards Greater Economic Interaction in

Editors: Rafiq Idris and Kasim Mansur

iii

© IPB PRESS. 2019

Publisher: IPB Press

The Economy of Sabah and Kalimantan / Editors Rafiq Idris, Kasim Mansur and Rizal Zamani Idris Bibliography: p. ISBN: 978-602-440-805-3

Book Title: Studies on The Economy of Sabah and Kalimantan

Towards Greater Economic Interaction in Borneo

Editors:

Rafiq Idris, Kasim Mansur and Rizal Zamani Idris

Cover Design and Layout:

Andreas Levi Aladin

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CONTENTS

Preface...... x

CHAPTER 1: ...... 1

Introduction ...... 1

CHAPTER 2: ...... 3

Economy of Kalimantan: ...... 3 a Snapshot ...... 3

CHAPTER 3: ...... 21

Exploring ’s Economy ...... 21

CHAPTER 4: ...... 35

Infrastructure Upgrading, Enhancing Connectivity & Bold Steps Needed to Better Connect with China Via Belt & Road Initiative ...... 35

CHAPTER 5: ...... 40

Entrepreneurship in the Borderland of : the Emerging Issues ...... 40

CHAPTER 6: ...... 56

Public Facilities in...... 56

Tarakan, Kalimantan and , Sabah Malaysia ...... 56

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CHAPTER 7: ...... 86

Some seaweed farmers in the divided island of Sebatik are technically more efficient than others. Why? ...... 86

CHAPTER 8: ...... 100

Urgency of Regulations for Special Economic Zone (SEZ) Establishment ...... 100 in the Border Region of Northern Borneo ...... 100

CHAPTER 10: ...... 120

Concluding Remarks & Recommendations ...... 120

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List of Contributors

DR RAFIQ IDRIS Senior Lecturer Faculty of Business, Economics and Accountancy Univerisiti Malaysia Sabah

PROF DATUK DR KASIM MANSUR Professor Faculty of Business, Economics and Accountancy Univerisiti Malaysia Sabah

ASSOCIATE PROF DR WONG HOCK TSEN Associate Professor Faculty of Business, Economics and Accountancy Univerisiti Malaysia Sabah

DR JAMES ALIN Senior Lecturer Faculty of Business, Economics and Accountancy Univerisiti Malaysia Sabah

DR YAHYA AHMAD ZEIN Lecturer Faculty of Law Borneo University

DR FZLINDA FABEIL Senior Lecturer Faculty of Business, Economics and Accountancy Univerisiti Malaysia Sabah

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DR MOCHAMMAD ARIF BUDIMAN Lecturer Politeknik Negeri

DR MARSO Senior Lecturer Department of Management Sekolah Tinggi Ilmu Ekonomi Bulungan Tarakan

DR ARIF @ KAMISAN PUSIRAN Senior Lecturer Faculty of Business, Economics and Accountancy Univerisiti Malaysia Sabah

DR SIDAH IDRIS Senior Lecturer Faculty of Business, Economics and Accountancy Univerisiti Malaysia Sabah

DAYANGKU ASLINAH ABD RAHIM Lecturer Faculty of Business, Economics and Accountancy Univerisiti Malaysia Sabah

HENDRA Lecturer Fakultas Ekonomi dan Bisnis Universitas Lambung Mangkurat

DATU RAZALI DATU ERANZA Lecturer Faculty of Business, Economics and Accountancy Univerisiti Malaysia Sabah

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DR RIZAL ZAMANI IDRIS Senior Lecturer Faculty of Humanities, Arts and Heritage Univerisiti Malaysia Sabah

KAMARUL MIZAL MARZUKI Lecturer Faculty of Business, Economics and Accountancy Univerisiti Malaysia Sabah

ROSLINAH MAHMUD Lecturer Faculty of Business, Economics and Accountancy Univerisiti Malaysia Sabah

MAXI SONDAKH Lecturer Department of Economics and Development Studies Sekolah Tinggi Ilmu Ekonomi Bulungan Tarakan

DEWI NURVIANTI Lecturer Faculty of Law Borneo Tarakan University

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Preface

Slightly higher per capita income (in North and ), bigger market size, the potential freer movement of capital, investment and skilled labors under the ASEAN Economic Community (AEC) framework among others are indeed important justifications to consider in building necessary infrastructure for connectivity with Kalimantan. As argued in our previous book in 2018, it is time to consider the idea of having road link with Kalimantan without ignoring the possible adverse effects. This book is a continuous effort to provide readers with an overview on the economic potentialities of Sabah and Kalimantan in general. Many studies are available with regard to both economies but at times, language barrier has made it to be less accessible for many readers. In recent years, Universiti Malaysia Sabah, headed by Prof Dr Rasid Mail has made important collaboration with higher learning institutions in Tarakan, to stimulate research on Sabah- Kalimantan. In addition, the editors together with Society Empowerment and Economic Development of Sabah (SEEDS) headed by the late Datuk Badil Zaman have organized a series of round table discussions that were held in Kota Kinabalu, Tawau and North Kalimantan involving various stakeholders such as business chambers representatives, authorities and academicians among others. It is hoped that this book will be beneficial for policymakers, academicians, students and other stakeholders. We would like to thank Universiti Malaysia Sabah (UMS), Society Empowerment and Economic Development of Sabah (SEEDS), Sabah Economic and Education Society, the late Datuk Badil Zaman, Datuk Seri Panglima Abdul Rahman Dahlan, the writers and all who have contributed to the publication of this book.

Dr Rafiq Idris, Prof Datuk Dr Kasim Mansur and Rizal Zamani Idris

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CHAPTER 1:

Introduction

Rafiq Idris, Kasim Mansur and Rizal Zamani Idris

The ASEAN Economic Community (AEC) is an initiative to establishing a single market where there will be freer movement of goods, services, capital and skilled labors that will be implemented gradually. The main objectives are to facilitate the movement of investment, capital, goods, services and skilled labor within ASEAN in order to enhance ASEAN’s trade and production networks, as well as establishing a more unified market for its consumers and firms.

In achieving the aims of the AEC, many challenges and issues faced by the ten member countries of ASEAN. Issues such as the effects of freer capital movement, mismatch labor qualifications and labor mobility among others have become matters of concern.

In this connection, several salient questions arise. In addition, many other questions arise: How will this integration affect the economy of the Borneo island? Will it help in stimulating the economy?

In a recent development, President of the Indonesian Republic, (Jokowi) had announced that the capital city of Indonesia will be shifted from to Kalimantan Timur (KALTIM). This development raises the question on the potential effects for Kalimantan Timur and its neighboring provinces, including Sabah. This book will discuss various aspects of economy in the Kalimantan and Sabah. Some of the chapters are not based on a study but on some secondary datas and conceptual views of the authors. The chapters are based on various authors’ contribution that come from different academic background such as Economics, Entrepreneurship, Law, Business and Tourism among others.

In the previous book, some work was done on various aspects of the economy. For example, see Rafiq I. (2018a); R. Idris (2018b); R. Idris (2018c); R. Idris (2018d); J. M. Alin

1 and D.R.D Eranza (2018), R.Z. Idris and R.Idris (2018); R. Idris and K. Mansur (2018); R. Idris, K. Mansur, R.Z. Idris, Z,Jamrin and Marso (2018); R.Idris and A.A. Majid (2018).

It is hoped that there will be more research to be undertaken by academicians and policy makers in the future as there are still huge research gap to be filled in. Many new issues are arising that require attention. The editors are optimistic that in the future various stakeholders would be willing to fund research projects similar to these topics.

REFERENCES

Rafiq I. (2018a). The Effect of Common Border on Export. In Rafiq Idris and Kasim Mansur (ed). Collection of Studies on Sabah-Kalimantan Economic Relations (2018).

J. M. Alin and D.R.D Eranza (2018). Rafiq Idris and Kasim Mansur (ed). Collection of Studies on Sabah-Kalimantan Economic Relations (2018).

R.Z. Idris and R.Idris (2018). Malaysia-Indonesia Relations. In Rafiq Idris and Kasim Mansur (ed). Collection of Studies on Sabah-Kalimantan Economic Relations (2018).

R. Idris and K. Mansur (2018). Sabah in ASEAN under the initiative of AFTA, BIMP-EAGA and AEC. In Rafiq Idris and Kasim Mansur (ed). Collection of Studies on Sabah-Kalimantan Economic Relations (2018).

R. Idris, K. Mansur, R.Z. Idris, Z,Jamrin and Marso (2018). Sabah-Kalimantan Road Connectivity: Effect of Cultural Affinity on Sabah’s Export Rafiq Idris and Kasim Mansur (ed). Collection of Studies on Sabah-Kalimantan Economic Relations (2018).

R.Idris and A.A. Majid (2018). Malaysia’s Consumer Products in North Kalimantan, in Rafiq Idris and Kasim Mansur (ed). Collection of Studies on Sabah-Kalimantan Economic Relations (2018).

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CHAPTER 2:

Economy of Kalimantan: a Snapshot

Rafiq Idris, Kasim Mansur and Marso

This chapter aims to give a snapshot of the economies in Kalimantan provinces. Salient factors such as sharing common border with North Kalimantan, Kalimantan as Sabah’s backdoor neighbor with huge market size of over 4 times than Sabah and the relocation of Indonesia’s capital from Jakarta to Kalimantan, have stimulated the interests of many analysts to research on the structure of Kalimantan’s economy in general.

Table 1 depicts the Gross Domestic Regional Product (GDRP) at Constant 2010 Market Price by Province in 2017. It clearly indicates that East Kalimantan recorded the highest Gross Domestic Regional Product throughout Kalimantan, followed by , South Kalimantan, and North Kalimantan. The GDRP of Kalimantan is the seventh largest in Indonesia.

Table 1: Gross Domestic Regional Product at Constant 2010 Market Price by Province (billion Rupiahs) 2017 Kalimantan Provinces2017 West Kalimantan124,306.74 Central Kalimantan89,565.10 South Kalimantan121,863.85 East Kalimantan452,847.48

North Kalimantan54,535.51

source: derived from BPS (2018) various issues note: very temporary figure

Table 2 depicts the percentage distribution of gross regional domestic product at (%) in 2017 for all the provinces in Kalimantan. The information clearly shows that mining and quarrying are the most important contributors to the income of the provinces with exception to Central and Western Kalimantan. In Central and Western Kalimantan, agriculture,

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West West

Kalimantan

Central Central

017forall provinces the in

Kalimantan

South

Kalimantan

East East

Kalimantan

note: very temporary figure temporary very note:

0.05 0.05 0.13 0.08 0.1

9.98 19.07 14.39 16.67 16.21

0.66 0.62 1.22 1.02 0.98

1.03 0.59 1.93 1.89 1.4

2.48 1.55 4.58 4.58 4.01

0.06 0.05 0.4 0.095.22 0.12 2.03 5.94 6.2 6.94

0.25 0.21 0.66 0.04 0.44

0.79 0.88 2.21 2.12 2.88

1.14 1.53 3.6 3.28 3.69

2.26 1.26 3.47 0.96 3.73

1.55 0.93 1.97 1.91 2.31

6.99 3.62 6.48 7.02 4.57

Kalimantan

27.38 46.31 20.75 11.44 5.4

16.32 7.96 14.59 20.7 20.3

12.45 8.07 8.01 9.78 12.8

11.36 5.3 9.68 12.22 14.13

North

Kalimantan Domestic Product at Current Market Prices (%), in 2 inDomesticPricesMarket ProductCurrent at (%),

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TablePercentage2: GrossDistributionof regional

Electricity and Gas Electricity

Manufacturing

Management, Remediation Activities Remediation Management, Mining and Quarying Mining Vehicles and Motorcycles Vehicles Compulsory Social Security Social Compulsory

Industry and Fishing Forestry Agriculture, Sewerage, Supply, waste Water Motor Trade, of Repair and Retail Wholesale and Defence; Administration Public source: derived from BPS (2018) various issues

Other Services Activities Services Other

Human and Social Work Work Activities and Social Human

Education Construction

Business Activities Business

Real Estate Activities Estate Real

Financial and Insurance Activities and Insurance Financial

Information and Communication Information Accomodation and Food Service Activities and Food Service Accomodation Transportaton and Storage Transportaton forestry and fishing sectors are the most important ones. For East, North and South Kalimantan is the important commodity under the mining and quarrying sector.

Table 3 shows the unemployment rate and labor force participation rate in Kalimantan provinces. The data indicates that unemployment rate ranges between 4.2 and 6.9 percent in 2017. Labor force participation is above 63 percent with South Kalimantan recorded the highest which is 70 percent.

Table 3: Unemployment Rate and Labor Force Participation Rate in Kalimantan

Kalimantan ProvincesUnemployment Rate Labor Force Pa rticipation Rate West Kalimantan4.3668.63 Central Kalimantan4.2367.74 South Kalimantan4.7770.06 East Kalimantan6.9163.75

North Kalimantan5.5468.24

source: derived from BPS (2018) various issues

In terms of cost of living, inflation rate is reported in table 4. Table 4 depicts that cost of living in the selected major cities in Kalimantan do not differ so much. It ranges between 2.5 and 3.85 and this is relatively low.

In terms of Human Development, the are presented here to see the different levels of human development in Kalimantan. The Human Development Index (HDI) refers to a statistic of composite index which takes into account life expectancy, education, and per capita income. High HDI score implies longer lifespan, higher education level and higher gross national income GNI (PPP) per capita. Table 5 shows the HDI in Kalimantan provinces.

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Table 4: Inflation Rate (%) in Kalimantan (2017) Selected Cities in KalimantanInflation Rate (%) (West Kalimantan)3.85 Palangkaraya (Central Kalimantan)3.11 Banjarmasin (South Kalimantan)3.42 (East Kalimantan)3.59 (East Kalimantan)2.45 Tarakan (North Kalimantan)2.77

Tanjung selor (North Kalimantan)2.4 source: derived from BPS (2018) various issues Table 5 indicates that the HDI is above 65 in all the provinces. In addition, East Kalimantan recorded the highest in Kalimantan which is the third highest in the whole of Indonesia (BPS, 2018) that is after D.K.I Jakarta and D.I Yogjakarta.

In terms of poverty incidence, table 6 shows the poverty rate in Kalimantan. Table 6 reveals that poverty rate in Kalimantan is less than 8 percent. South Kalimantan recorded the lowest poverty incidence which is 4.7 percent.

Table 5: Human Development Index in Kalimantan Provinces (2017) Kalimantan ProvincesHDI West Kalimantan66.26 Central Kalimantan66.26 South Kalimantan69.65 East Kalimantan75.12

North Kalimantan69.84 source: derived from BPS (2018) various issues

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Table 6: poverty Rate in Kalimantan (%) in 2017

Kalimantan ProvincesPoverty Rate (%) West Kalimantan7.86 Central Kalimantan5.26 South Kalimantan4.7 East Kalimantan6.08

North Kalimantan6.96

source: derived from BPS (2018) various issues

References

BPS (2018). Kalimantan Barat Province in Figures 2018

BPS (2018). Kalimantan Selatan Province in Figures 2018

BPS (2018). Kalimantan Tengah Province in Figures 2018

BPS (2018). Kalimantan Timur Province in Figures 2018

BPS (2018). Kalimantan Utara Province in Figures 2018

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